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Introduction to Cardano & DeFi

This module gives you the background you need to understand Indigo: what blockchain and DeFi are, and why synthetic assets matter on Cardano.

Learning outcomes

  • Explain at a high level what blockchain and DeFi are.
  • Understand why Cardano is a relevant platform for DeFi.
  • See where synthetic assets (and Indigo) fit in the DeFi landscape.

What is blockchain?

A blockchain is a shared ledger that many participants maintain without a single central authority. Transactions are grouped into blocks, validated by consensus, and chained together so that past data is hard to alter. This enables:

  • Transparency — Anyone can verify the history of transactions.
  • Censorship resistance — No single party can easily block or reverse valid transfers.
  • Programmable money — Rules can be encoded in smart contracts that execute when conditions are met.

Cardano is a proof-of-stake blockchain with its own native currency (ADA) and a smart-contract layer (Plutus) that runs on the eUTxO model (extended Unspent Transaction Output). We will not go deep into eUTxO here; the Developer track covers it.

What is DeFi?

DeFi (Decentralized Finance) refers to financial services built on blockchains: lending, borrowing, trading, and creating synthetic or derivative assets — without relying on a traditional bank or broker. Users connect with wallets (e.g. Nami, Eternl, Lace) and interact with smart contracts through web apps.

On Cardano, DeFi includes:

  • DEXs (Decentralized Exchanges) — Swap tokens peer-to-peer via liquidity pools.
  • Lending and borrowing — Use collateral to borrow assets or earn yield.
  • Synthetic assets — Tokens that track the price of another asset (e.g. a stablecoin tracking the US dollar).

Indigo fits in the last category: it lets you create and use synthetic assets (iAssets) on Cardano, backed by collateral and maintained by protocol mechanics (e.g. Stability Pools, liquidations).

Why Cardano?

Cardano aims for security, sustainability, and formal methods in smart contracts. For users and developers, that means:

  • A clear separation between the settlement layer and the computation layer (Plutus).
  • Active development and a growing DeFi ecosystem (DEXs, stablecoins, liquid staking).
  • A focus on interoperability and long-term upgrades.

Indigo is built on Cardano: it uses Cardano’s native assets and Plutus contracts to issue iAssets (e.g. iUSD, iBTC, iETH) that track real-world prices via oracles.

Where Indigo fits

Indigo is a synthetic assets protocol on Cardano. It allows users to:

  • Lock collateral (e.g. ADA) in a Collateralized Debt Position (CDP).
  • Mint iAssets (e.g. iUSD) against that collateral.
  • Use iAssets in the broader Cardano ecosystem (e.g. trade on DEXs, provide liquidity).
  • Participate in Stability Pools and governance (INDY token).

So in one sentence: Indigo lets you create Cardano-native tokens that mirror the value of real assets (like the US dollar or Bitcoin), using over-collateralization and protocol incentives to keep those pegs stable.

Summary

  • Blockchain = shared, verifiable ledger; DeFi = financial applications on top of it.
  • Cardano = proof-of-stake chain with Plutus smart contracts and a growing DeFi ecosystem.
  • Indigo = synthetic assets protocol on Cardano: mint and use iAssets (e.g. iUSD) with collateral and Stability Pools.

Next: What is a Synthetic Asset? — we zoom in on iAssets and how they work.